Women on Boards:Where we are, Why it matters, What can be done

Kimberly Gladman, Ph.D., CFA – Director of Research & Risk AnalyticsMichelle Lamb – Senior Research Associate

Order of Presentation

1. Where we are • Overall stats - global and by economic bloc• Reaction to study/headlines re: France vs US

2. Why it matters• Gender diversity impacts

3. What can be done• Drivers of female board representation• Our findings post-quota in France and Italy

Where we are:Global progress is happening, slowly

  Q4 2009 Q4 2010 Q4 2011

Aggregate WOB 9.3% 9.8% 10.5%Boards with ≥ 1 Woman 56.1% 58.2% 60.2%

Boards with ≥ 3 Women 8.3% 8.5% 9.8%

Boards with Female Chair 2.0% 2.2% 2.1%Female Audit Committee Members 11.5% 11.9% 12.5%Female Audit Committee Chairs 6.5% 7.0% 7.4%

Female Gov/Nom Committee Members11.8% 11.7% 12.1%

Female Gov/Nom Committee Chair 6.2% 6.5% 6.8%Female Remuneration Committee Members 11.1% 11.3% 11.8%Female Remuneration Committee Chair 6.2% 7.1% 7.0%

Industrialized vs. EmergingIndustrialized Markets

(n=3,617)Emerging Markets

(n=704)

Percentage Women On Boards 11.1% 7.2%

Increase in % WOB 2009-2011 1.4% 0.5%

Boards with ≥ 3 Women 10.5% 6.3%

Boards with ≥ 1 Woman 63.3% 44.3%

Boards with Female Chair 1.9% 3.2%

Female Audit Committee Members 13.3% 7.3%

Female Gov/Nom Committee Members 12.6% 6.8%

Female Remuneration Committee Members 12.4% 7.0%

Female Audit Committee Chairs 8.3% 2.6%

Female Gov/Nom Committee Chair 7.7% 1.6%

Female Remuneration Committee Chair 7.7% 3.3%

Why it matters: Stock price

• Credit Suisse (2012): gender-diverse large-cap boards in MSCI ACWI outperform by 26% in 2005-2011

• MSCI ACWI small- and midcaps outperform by 17%

• Most outperformance post-financial crisis

Why it matters: Accounting

• Parker et. al. (2012): gender-diverse boards have fewer restatements

• Gul et. al. (2008): gender-diverse boards have more appropriate levels of oversight

• Levi et. al. (2008): gender-diverse teams produce more fairly-priced acquisitions

Why it matters: Investor behavior

• Studies of trading behavior: women less prone to behavioral finance errors

• Fintrader.net (2012)• Odean and Barber (2001)

What’s going on?

Multiple explanations:• Women may be less overconfident/more

collaborative• Diversity in general (not just gender diversity)

may improve group decision-making

Ways to increase gender diversity

• Legal requirements• Governance codes• Investor initiatives• Special cases (South Africa)

Case Studies: France

• French companies in the MSCI World• Newest director appointments• Overwhelming majority well-qualified• Negligible overboarding• Many new to public boards, but with private company,

non-profit experience

Case Study: Italy

• Italian companies in the FTSE MIB • All female directors• Overwhelming majority well-qualified• Significant minority from prominent families• Non-Italians most likely to be overcommitted

Q&A

• Time for your questions• For more, contact:kgladman@gmiratings.commlamb@gmiratings.com